Effort aims to unseat two Alden-allied board members at Tribune’s annual meeting

By Julie Reynolds

READ The NewsGuild’s letter here

Saying it is “alarmed and concerned,” The NewsGuild has launched a proxy campaign to Tribune Publishing shareholders that raises questions about the shrinking assets of Alden Global Capital, the hedge fund owner of rival newspaper chain MNG Enterprises.

The Guild, which represents news workers at more than a dozen Alden-owned papers, filed the letter with the U.S. Securities and Exchange Commission on May 4, asking Tribune shareholders to block two Alden-allied members from taking permanent seats on Tribune’s board.

MNG (also known as MediaNews Group or Digital First Media) is considered the nation’s third-largest newspaper chain and is poised to take over or merge with Tribune, which owns the Chicago Tribune, The New York Daily News, The Baltimore Sun and other newspapers.

Alden acquired nearly a third of Tribune shares in November but is prohibited from buying any more shares until after June 30.

Tribune’s board surprised many observers when it added — without a fight — two temporary board seats with hand-picked Alden directors after the hedge fund became the company’s largest shareholder last fall.

Now, at Tribune’s May 21 virtual annual meeting, shareholders are expected to vote on whether the two Alden representatives should remain permanently on the board, which will also shrink from its current eight to six members, increasing the percentage of Alden’s influence.

“Alden’s two hand-picked board members, Christopher Minnetian and Dana Goldsmith Needleman, lack satisfactory public board experience and have problematic track records,” the NewsGuild’s letter states. “Further, the relationship of Mr. Minnetian and Ms. Needleman to Alden raises questions about their independence and whether they will put the interests of Alden ahead of other shareholders, not to mention readers.”

Also in the rumor mill is the possibility that Alden buys enough stock to outright control the company when its “stand-still” agreement expires at the end of June, or whether the two chains will merge.

“We urge shareholders to VOTE NO on the election of Board members Needleman and Minnetian,” the letter states.

Lack of experience

The letter, signed by NewsGuild President Job Schleuss, alleges that Minnetian and Needleman “lack satisfactory public company board experience,” adding two examples of questionable corporate track records:

  • “Mr. Minnetian, a former managing director with private equity firm Ripplewood Holdings, served as the Chairman of the Board of food company Hostess Brands in 2012.During his tenure, Hostess filed for bankruptcy and laid off more than 18,000 workers.
  • “Ms. Needleman was appointed as a director at pharmacy company Fred’s Inc. in May 2018.Just over a year later, in September 2019, Fred’s filed for Chapter 11 bankruptcy and closed all of its stores, laying off more than 6,500 employees.”

Citing Minnetian’s and Needleman’s oversight of three companies that have gone bankrupt and left tens of thousands of people jobless — Hostess, Fred’s, and Payless ShoeSource — Schleuss concludes that “it is reasonable to ask what fate awaits Tribune Publishing under Alden Global Capital’s influence and with Mr. Minnetian and Ms. Needleman on the Board of Directors.”

Schleuss also calls attention to Minnetian’s involvement in and responsibility for several Alden actions that have raised red flags.

Minnetian, the letter said, “bears considerable responsibility for and should answer for” Alden’s investment of nearly $250,000 of newspaper employees’ pension monies into Alden’s own funds, along with the “extraction of cash out of the news operations of MNG to fund outside activities, and the opaque disposal of MNG real estate.”

By extracting cash from its news chain to use as it pleases, the letter states that Alden has effectively turned the chain into a hedge fund, “investing its balance-sheet capital in unrelated companies and assets.”

On shaky ground?

SEC filings show that Alden’s assets and staff have shrunk considerably in the past few years, calling into question what exactly the hedge fund is bringing to the table in a possible merger with Tribune.

“Alden Global has itself faced substantial cuts to its staff and declines in its assets under management in recent years, raising questions about whether it is positioned to turn Tribune around,” Schleuss writes.

Alden’s assets under management have declined dramatically since early 2017, falling below the billion-dollar threshold, which for a hedge fund is fairly miniscule. In fact, assets have dropped 64 percent, “from $2.123 billion in 2017 to $764.7 million earlier this year,” the letter states. Alden’s annual filings with the SEC back this up.

The filings also show that Alden’s staff is less than half of what it was three years ago, dropping from 22 employees in 2017 to 10.

“Rather than being Tribune Publishing Company’s savior, Alden may lack the capacity to turn Tribune around,” the letter says.

Alden President Heath Freeman has argued recently that Alden doesn’t influence the Tribune’s business decisions, saying in a March 27 letter to Illinois Senators Dick Durbin and Tammy Duckworth that “Alden does not, and cannot, make decisions regarding operations, selling assets, influencing newspaper portfolios, staffing, or facilities for Tribune. These decisions are made solely by Tribune.”

Ken Doctor, a media analyst at Harvard’s Nieman Lab, doesn’t seem to be buying it:

“The arithmetic is clear. Alden’s Heath Freeman — already exerting great influence at Tribune, which dispatched CEO Tim Knight and pushed forward with significant job cuts pre-COVID — is lining up the company or a merger with his own MNG Enterprises. Observers expect that the soon-to-be-reduced Tribune board will move to ‘explore the best use of its assets.’ ”

That last line is Alden-speak for strip mining cash from whatever real estate, contracts and receivables Tribune may still have.

In another hint that Alden may be more financially strapped than it would like shareholders to believe, Freeman recently spearheaded a private movement to demand a cut of revenue from online news aggregators like Facebook and Google News.

In yet another letter, the formerly silent Freeman recently reached out to fellow publishers, asking them to join the fight.

The New York Times’ Ben Smith tweeted a copy of the letter last week, in which Freeman quotes the Times saying that in 2017, “Google alone conservatively made $4.7 billion from the work of news publishers.”

He went on to call for “a judicial review of how our trusted content is misused by others for their profit.”

Freeman ended his pitch by saying that any fees collected could help “ensure our newsrooms have the resources they need,” — a surreal rallying cry from the man who has single-handedly cut editorial staffing at his own papers by more than three times the national rate.